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iRobot Reports Fourth-Quarter and Full-Year Financial Results
PR Newswire
Q4 and Full-Year Revenue and EPS Exceed Expectations; Record 4th Quarter Revenue
Plans Incremental 2016 Investment to Drive Longer-Term Growth

BEDFORD, Mass., Feb. 10, 2016 /PRNewswire/ -- iRobot Corp. (NASDAQ: IRBT), a leader in delivering robotic technology-based solutions, today announced its financial results for the fourth quarter and full year ended January 2, 2016.

iRobot logo.

"2015 was another great year for iRobot. Throughout the year, we made strategic investments in our business that drove record quarterly revenue and resulted in revenue and EPS that exceeded our expectations," said Colin Angle, chairman and chief executive officer of iRobot. "The divestiture of the Defense & Security business announced on February 4, 2016 will allow us to focus on the home and deliver accelerated revenue growth in 2016 and beyond.

"Revenue, excluding D&S, is expected to grow 11 - 13% in 2016 as we expand worldwide distribution of Roomba 980, tap further into a large and growing market in China and build our wet floor care business. Our Roomba marketing programs were highly successful in the United States, where Q4 sell through at our top 5 retailers was up more than 70% year-on-year, resulting in a significant return on our investment. We are highly confident that we have the right marketing mix to export overseas to accelerate growth in those markets, and we expect revenue in all three geographic regions to grow in the low to mid-teens in 2016.

"Looking over a 3-year horizon, it is critical that we make strategic investments today to drive diversification of Home revenue for the future. This will include product diversification through more significant contributions from wet floor care as well as future revenue opportunities from connected, mapping products. This will also include more significant regional diversification as China continues to ramp and Japan returns to growth. The capital allocation and investment decisions we are making today will pave the road for higher revenue acceleration in 2017 and 2018.

"For 2016, we expect revenue of $630 to $642 million, EPS of between $1.20 and $1.40, and Adjusted EBITDA of $80 to $90 million. Expectations include a stub period of one quarter of Defense & Security results as well as the impact of one-time divestiture costs, most of which we expect to incur during Q1 2016."

Financial Results

  • Revenue for the fourth quarter of 2015 was $206.4 million, compared with $159.3 million for the fourth quarter of 2014. Revenue for the full year 2015 was $616.8 million, compared with $556.8 million for the full year 2014.
  • Net income for the fourth quarter of 2015 was $19.3 million, compared with $9.4 million for the fourth quarter of 2014. Net income for the full year 2015 was $44.1 million, compared with $37.8 million for full-year 2014.
  • Quarterly earnings per share were $0.65, compared with $0.31 in the fourth quarter last year. Full-year earnings per share were $1.47, compared with $1.25 last year. The enactment of the 2015 R&D credit in December 2015 positively impacted fourth-quarter and full-year 2015 EPS by $0.05. In 2014, there was a positive $0.04 impact on fourth-quarter and full-year EPS from the R&D credit enacted in December 2014.
  • Adjusted EBITDA for the fourth quarter of 2015 was $35.0 million, compared with $19.7 million in the fourth quarter of 2014. Adjusted EBITDA for the full year 2015 was $92.0 million, compared with $79.8 million for full-year 2014.

Business Highlights

  • Domestic Home Robot business grew 46% in Q4 and 25% for the full year over 2014, due primarily to investment in ad media, national promotions, and the launch of Roomba 980.
  • Growth in China was more than 70% year-over-year in 2015 driven by successful execution of our e-commerce strategy, particularly on the 11/11 and 12/12 holidays.
  • Our Defense & Security business delivered full-year results consistent with our expectations. On February 2, 2016, we signed a definitive agreement to sell the business.
  • Announced a $65 million addition to the 2016 share repurchase program, bringing the total 2016 program to over $100 million.

Financial Expectations

Management provides the following expectations with respect to the year ending December 31, 2016 and first quarter ending April 2, 2016. The expectations assume the divestiture is closed during the first quarter, but the exact timing is uncertain, resulting in the following ranges for guidance:


Fiscal Year 2016:


Revenue                                 

$630 - $642 million

Earnings Per Share*                

$1.20 - $1.40

Adjusted EBITDA                    

$80 - $90 million



Full-Year 2016 BU Revenue: 


Home                                     

$625 - $635 million          

Other                                      

$2 - $7 million



Q1 2016:


Revenue                                  

$125 - $135 million

(Loss)/Earnings Per Share*      

($0.03) – $0.04                                   

Adjusted EBITDA                    

$8 - $11 million



* Includes approximately $0.05 of one-time divestiture costs as well as $0.05-$0.07 of D&S stub period loss for Q1.

Fourth-Quarter and Full-Year Conference Call
iRobot will host a conference call tomorrow at 8:30 a.m. ET to discuss its financial results for the fourth fiscal quarter and full year 2015, and outlook for the first fiscal quarter and full year 2016 financial performance. Pertinent details include: 

Date:                         Thursday, February 11, 2016  
Time:                         8:30 a.m. ET
Call-In Number:           847-619-6397
Passcode:                  40924296

A live, audio broadcast of the conference call will also be available at http://investor.irobot.com/phoenix.zhtml?c=193096&p=irol-EventDetails&EventId=5206137. An archived version of the broadcast will be available on the same website shortly after the conclusion of the live event. A replay of the telephone conference call will be available through February 18, and can be accessed by dialing 630-652-3042, passcode 40924296#.

About iRobot Corp.
iRobot designs and builds robots that empower people to do more. The company's home robots help people find smarter ways to clean and accomplish more in their daily lives. Its remote presence robots enable virtual presence from anywhere in the world. iRobot's portfolio of solutions feature proprietary technologies for the connected home and advanced concepts in navigation, mobility, manipulation and artificial intelligence. For more information about iRobot, please visit www.irobot.com.

For iRobot Investors
Certain statements made in this press release that are not based on historical information are forward-looking statements which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. This press release contains express or implied forward-looking statements relating to, among other things, iRobot Corp.'s expectations regarding future financial performance, future operating performance and growth, the rate of revenue growth, demand for our robots, strategic investments to diversify Home revenue, the impact of the divestiture of our Defense & Security business, and anticipated revenue, earnings per share and Adjusted EBITDA for fiscal year 2016 and the first quarter ending April 2, 2016. These statements are neither promises nor guarantees, but are subject to a variety of risks and uncertainties, many of which are beyond our control, which could cause actual results to differ materially from those contemplated in these forward-looking statements. In particular, the risks and uncertainties include, among other things: our ability to operate in an emerging market, the financial strength of our customers and retailers, general economic conditions, market acceptance of our products, and competition. Existing and prospective investors are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. iRobot Corp. undertakes no obligation to update or revise the information contained in this press release, whether as a result of new information, future events or circumstances or otherwise. For additional disclosure regarding these and other risks faced by iRobot Corp., see the disclosure contained in our public filings with the Securities and Exchange Commission.

This press release includes Adjusted EBITDA and revenue and net income per share excluding Defense & Security revenue, which are non-GAAP financial measures as defined by SEC Regulation G. We define Adjusted EBITDA as earnings before interest, taxes, depreciation, amortization, stock-based compensation expense, merger, acquisition and divestiture expense, net intellectual property litigation expense, and restructuring expense. Reconciliations between net income and Adjusted EBITDA, between revenue and revenue excluding Defense & Security revenue, and between net income per share and net income per share excluding Defense & Security net income per share, are provided in the financial tables at the end of this press release.

iRobot Corporation

Consolidated Statements of Income

(in thousands, except per share amounts)

(unaudited)














 For the three months ended


 For the twelve months ended


January 2,

December 27,


 January 2,

 December 27,


2016

2014


2016

2014







Revenue

206,420

159,342


616,778

556,846

Cost of revenue

111,093

83,007


327,852

298,791







Gross margin

95,327

76,335


288,926

258,055







Operating expenses:






  Research and development

20,185

17,886


76,071

69,408

  Selling and marketing

36,876

32,180


97,772

86,091

  General and administrative

15,270

13,501


54,465

49,439

      Total operating expenses

72,331

63,567


228,308

204,938







Operating income

22,996

12,768


60,618

53,117







Other income (expense), net

3,301

(239)


2,353

(708)







Income before income taxes

26,297

12,529


62,971

52,409

Income tax expense

6,966

3,143


18,841

14,606

Net income

$   19,331

$    9,386


$   44,130

$    37,803







Net income per share






   Basic

$       0.66

$      0.32


$       1.49

$        1.28

   Diluted

$       0.65

$      0.31


$       1.47

$        1.25







Number of shares used in per share calculations






   Basic

29,140

29,626


29,550

29,485

   Diluted

29,602

30,240


30,107

30,210













Stock-based compensation included in above figures:






        Cost of revenue

$        414

$       239


$      1,076

$         865

        Research and development

519

934


3,256

3,359

        Selling and marketing

368

436


1,457

1,296

        General and administrative

2,420

2,153


8,394

8,258

            Total

$     3,721

$    3,762


$    14,183

$     13,778







 

 

iRobot Corporation

 Condensed Consolidated Balance Sheets

 (unaudited, in thousands)






January 2,


 December 27,


2016


2014





 Assets








 Cash and cash equivalents

$          179,915


$        185,957

 Short term investments

33,124


36,166

 Accounts receivable, net

104,679


71,056

 Unbilled revenue

452


2,614

 Inventory

61,678


47,857

 Deferred tax assets

-


21,505

 Other current assets

9,501


9,704

   Total current assets

389,349


374,859

 Property and equipment, net

26,850


31,297

 Deferred tax assets

31,721


8,409

 Goodwill

48,751


48,751

 Intangible assets, net

15,664


19,146

 Other assets

9,408


10,751

 Total assets

$          521,743


$        493,213





 Liabilities and stockholders' equity








 Accounts payable

$           61,655


$          60,256

 Accrued expenses

15,954


18,701

 Accrued compensation

15,752


16,235

 Deferred revenue and customer advances

3,265


3,849

   Total current liabilities

96,626


99,041

 Long term liabilities

7,706


3,736

 Stockholders' equity

417,411


390,436

 Total liabilities and stockholders' equity

$          521,743


$        493,213





 

 

iRobot Corporation

  Consolidated Statements of Cash Flows

 (unaudited, in thousands)








 For the twelve months ended


January 2,

 December 27,


2016

2014

Cash flows from operating activities:



Net income

$      44,130

$      37,803

Adjustments to reconcile net income to net cash provided by operating activities:



Depreciation and amortization

15,090

13,049

Loss on disposal of property and equipment

214

246

Gain on sale of investment

(3,287)

-

Stock-based compensation

14,183

13,778

Deferred income taxes, net

(985)

3,101

Tax benefit of excess stock-based compensation deductions

(1,467)

(3,051)

Non-cash director deferred compensation

149

49

Changes in operating assets and liabilities — (use) source



Accounts receivable

(33,623)

(31,708)

Unbilled revenue

2,162

(1,758)

Inventory

(13,978)

(2,387)

Other assets

203

(2,856)

Accounts payable

3,786

16,249

Accrued expenses

(2,768)

3,695

Accrued compensation

(483)

(3,371)

Deferred revenue and customer advances

(584)

(1,236)

Long term liabilities

3,970

(997)

Net cash provided by operating activities

26,712

40,606




Cash flows from investing activities:



Additions of property and equipment

(9,372)

(13,774)

Change in other assets

(1,015)

(250)

Proceeds from sale of cost method investment

5,645

-

Purchase of investments

(17,755)

(31,219)

Sales of investments

20,500

16,500

Net cash used in investing activities

(1,997)

(28,743)




Cash flows from financing activities:



Income tax withholding payment associated with restricted stock vesting

(1,295)

(1,626)

Proceeds from stock option exercises

6,464

8,943

Stock repurchases

(37,393)

(1,678)

Tax benefit of excess stock-based compensation deductions

1,467

3,051

Net cash provided by (used in) financing activities

(30,757)

8,690




Net increase (decrease) in cash and cash equivalents

(6,042)

20,553

Cash and cash equivalents, at beginning of period

185,957

165,404

Cash and cash equivalents, at end of period

$    179,915

$    185,957




 

 

iRobot Corporation

Supplemental Information

(unaudited)














 For the three months ended


 For the twelve months ended


January 2,

December 27,


January 2,

December 27,


2016

2014


2016

2014







Revenue: *












Home Robots

$        175,197

$        134,131


$        559,619

$        507,414







    Domestic

$          84,317

$          57,759


$        234,904

$        187,643

    International

$          90,880

$          76,372


$        324,715

$        319,771













Defense & Security

$          30,504

$          24,133


$          55,004

$          45,502







    Domestic

$          23,437

$          16,483


$          34,304

$          26,825

    International

$            7,067

$            7,650


$          20,700

$          18,677







    Product

$          30,184

$          21,367


$          54,080

$          42,314

    Contract

$               320

$            2,766


$               924

$            3,188







    Product Life Cycle

$          20,097

$          16,290


$          31,561

$          27,493













Gross Margin Percent:






    Home Robots

49.2%

52.2%


50.9%

50.5%

    Defense & Security

50.7%

47.4%


45.9%

46.4%

    Total Company

46.2%

47.9%


46.8%

46.3%













Units shipped:






    Home Robots *

771

571


2,436

2,174

    Defense & Security

102

135


294

265













Average gross selling prices for robot units:






    Home Robots

$              262

$              255


$              251

$              245

    Defense & Security *

$                99

$                37


$                77

$                56













Defense & Security Funded Product Backlog *

$         10,464

$         18,188


$         10,464

$         18,188













Days sales outstanding

46

42


46

42







Days in inventory

51

53


51

53







Headcount

622

572


622

572













* in thousands






 

 


iRobot Corporation 

 Adjusted EBITDA Reconciliation to GAAP

 (unaudited, in thousands)














 For the three months ended


 For the twelve months ended


January 2,

December 27,


January 2,

December 27,


2016

2014


2016

2014







 Net income

$      19,331

$        9,386


$      44,130

$      37,803







 Interest income, net

(196)

(174)


(678)

(673)

 Income tax expense

6,966

3,143


18,841

14,606

 Depreciation

3,599

2,516


11,375

9,192

 Amortization

922

955


3,715

3,857







 EBITDA

30,622

15,826


77,383

64,785













 Stock-based compensation expense

3,721

3,762


14,183

13,778

 Merger, acquisition and divestiture expense*

567

-


822

-

 Net intellectual property litigation (income) expense

99

73


(394)

1,214

 Restructuring expense

-

-


-

-







 Adjusted EBITDA

$      35,009

$      19,661


$      91,994

$      79,777



















 

* This definition was modified in the fourth quarter of fiscal 2015 to incorporate divestiture related costs. The $822,000 for the twelve month period ended January 2, 2016 includes $255,000 of costs not previously reported that were incurred in fiscal 2015 prior to the fourth quarter of 2015.


Use of Non-GAAP Financial Measures









In evaluating its business, iRobot considers and uses Adjusted EBITDA as a supplemental measure of its operating performance. The Company defines Adjusted EBITDA as earnings before interest, taxes, depreciation, amortization, stock-based compensation expense, merger, acquisition and divestiture expense, net intellectual property litigation expense, and restructuring expense. The Company also presents Adjusted EBITDA because it believes it is frequently used by securities analysts, investors and other interested parties as a measure of financial performance.


The term Adjusted EBITDA is not defined under U.S. generally accepted accounting principles, or U.S. GAAP, and is not a measure of operating income, operating performance or liquidity presented in accordance with U.S. GAAP. Adjusted EBITDA has limitations as an analytical tool, and when assessing the Company's operating performance, investors should not consider Adjusted EBITDA in isolation, or as a substitute for net income (loss) or other consolidated income statement data prepared in accordance with U.S. GAAP. Among other things, Adjusted EBITDA does not reflect the Company's actual cash expenditures.  Other companies may calculate similar measures differently than iRobot, limiting their usefulness as comparative tools.  iRobot compensates for these limitations by relying primarily on its GAAP results and using Adjusted EBITDA only supplementally.

 

iRobot Corporation

 Impact of Anticipated Defense and Security (D&S) Divestiture 

 (in millions, except per share amounts)

 (unaudited)









































 For the fiscal year ended January 2, 2016




 Gross margin


 Operating expenses


 Operating income


 Net income


 Revenue


$

%


$

%


$

%


 per share














 As reported (GAAP) *

$          617


$          289

46.8%


$          228

37.0%


$            61

9.9%


$1.47














 D&S related **

55


24

43.6%


20

36.4%


4

7.3%


$0.10














 Excluding D&S (Non-GAAP) *

$          562


$          265

47.2%


$          208

37.0%


$            57

10.1%


$1.37









































 Financial expectations for the fiscal year ending December 31, 2016













 Net income


 Revenue


 Gross margin %


 Operating expense %


 Operating income %


 per share














 Expected (GAAP) *

 $630 - $642


 47% - 48%


 38% - 39%


 8% - 9%


 $1.20 - $1.40














 D&S related **

 $2 - $7


 37% - 38%


 120% - 150%


 (100% - 110%)


 ($0.10 - $0.12)














 Excluding D&S (Non-GAAP) *

 $625 - $635


 47% - 48%


 38% - 39%


 9% - 10%


 $1.30 - $1.50








































 * GAAP refers to U.S. generally accepted accounting principles.





















 ** Includes divestiture related costs.












 

 

iRobot Corporation 

 Impact of Anticipated Defense and Security (D&S) Divestiture on Revenue

 (unaudited, in millions)










 Fiscal year ended
January 2, 2016


 Fiscal year ending
December 31, 2016





 Consolidated revenue including D&S

$617


 $630 - $642

   Year-over-year growth %

11%


 2% - 4%





 Full year D&S revenue 

$55


 $2 -$7 *





 Consolidated revenue excluding D&S

$562


 $625 - $635

   Year-over-year growth %

10%


 11% - 13%









 * Assumes the D&S divestiture is closed during the first quarter.





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SOURCE iRobot Corp.

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